Markets saw modest gains at the start of the week as traders continued to absorb last week’s unexpected 50 basis point rate cut by the Federal Reserve, which triggered a surge in asset prices across stocks, cryptocurrencies, and precious metals.
Investors are now turning their attention to several key events: upcoming speeches by Federal Reserve officials, Thursday’s release of second-quarter GDP figures, and Friday’s report on the Personal Consumption Expenditures (PCE) index, the Fed's preferred measure of inflation. These indicators are expected to provide further insight into the potential scale of another rate cut in November.
Data provided by TradingView shows that after hovering around support at $63,000 over the weekend, Bitcoin bulls attempted to push above resistance at $64,000 on Monday morning but ran out of steam after a surge to $64,760 – its highest price in nearly a month – at which point bears smacked King Crypto back down to $63,500.
“I believe the price action around Bitcoin, especially reaching towards one-month highs, suggests a market reacting positively to macroeconomic news, like the Federal Reserve's rate cut decisions,” said Brian Dixon, CEO of OTC Capital, in a note shared with Kitco Crypto. “This could be interpreted as investors moving capital into Bitcoin as a hedge against potential inflation or devaluation of traditional currencies, especially in light of significant monetary policy shifts.”
Bitcoin’s gains today are part of a rebound that started last week when it tested the lower trendline of its prevailing bull flag trend.
Unlike traditional assets, Bitcoin has no underlying value tied to physical assets, ownership in a company, or dividend payouts. Its price is determined entirely by supply and demand dynamics. Bitcoin miners earn new coins by validating and adding transaction blocks to the blockchain, but the total supply is limited to 21 million BTC. Bitcoin price volatility stems from changes in demand, making investor sentiment the primary factor that influences Bitcoin’s price.
When open interest rises, more capital flows into the market, which often corresponds with expectations of significant price movements. This implies that traders are actively positioning themselves in the market, potentially anticipating further price increases.
The fact that funding rates have shifted from negative territory earlier in the month to positive territory now suggests a shift in sentiment toward a more bullish outlook. That means more traders expect Bitcoin’s price to continue rising and will pay the funding cost to hold their long positions.
Every time 210,000 blocks are added to the Bitcoin blockchain, a process called halving takes place.
Miners, who earn BTC for validating blocks, see their rewards reduced by 50% with each halving. This occurs roughly every four years, effectively cutting miners' earnings in half.
Halvings play a crucial role in limiting Bitcoin’s supply, which, in turn, is designed to support its price over time.
Historically, BTC prices have followed certain cycles around halving events. Prices have typically bottomed about a year before a halving. Then they rise for more than a year after a halving. But these patterns aren’t set in stone.
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